Uber pulls psychological levers to drive growth

Uber officials are "using what they know about drivers, their control over the interface and the terms of transaction to channel the behaviour of the driver in the direction they want it to go", says an analyst
Uber officials are "using what they know about drivers, their control over the interface and the terms of transaction to channel the behaviour of the driver in the direction they want it to go", says an analystPHOTO: NYTIMES

NEW YORK • Ride-hailing giant Uber is engaged in a behind-the- scenes experiment in behavioural science to manipulate its drivers to drive corporate growth, reflecting the changing ways companies are managing workers amid the rise of the freelance-based "gig economy".

Uber's drivers are officially independent business owners rather than traditional employees with set schedules. This lets Uber minimise labour costs but means it cannot compel drivers to show up at a specific place and time. And this lack of control can wreak havoc on a service whose goal is to seamlessly transport passengers whenever and wherever they want.

Uber helps solve this fundamental problem by using psychological inducements and other techniques unearthed by social science to influence when, where and how long drivers work. It is a quest for a perfectly efficient system: a balance between rider demand and driver supply at the lowest cost to passengers and the company.

The dimension of Uber's efforts in the field became evident in interviews with several dozen current and former Uber officials, drivers and social scientists, as well as a review of behavioural research.

Uber's recent emphasis on drivers is no accident. As problems have mounted at the company, from an allegation of sexual harassment in its offices to revelations that it created a tool to deliberately evade regulatory scrutiny, Uber has made softening its posture towards drivers a litmus test of its ability to become a better corporate citizen.

 

And as platform-mediated work like driving for Uber becomes the way people make a living, the company's example illustrates that pulling psychological levers may become the reigning approach to managing the American worker.

Though employers have long borrowed insights from social science to get more out of their workers, they are constrained in doing so. A large body of law and custom in the United States holds that because employers have far more power over their employees than businesses do over their customers, they must provide them with far greater protections - not least, a minimum wage and overtime pay.

But Uber exists in a kind of legal and ethical purgatory. Because its drivers are independent contractors, they lack most of the protections associated with employment.

Uber officials are "using what they know about drivers, their control over the interface and the terms of transaction to channel the behaviour of the driver in the direction they want it to go", said law professor Ryan Calo at the University of Washington, who studies how firms use data and algorithms to exploit psychological weaknesses.

Alongside Uber's daunting targets for expanding its pool of drivers to meet mounting demand, a high turnover has threatened to cap its growth. Underlying the tension between the company and its drivers is the fact that its interests and theirs are at odds on some level.

Drivers, who keep what is left of their gross fare after Uber takes a roughly 25 per cent fee, prefer some scarcity in their ranks to keep them busier and push up earnings.

For its part, Uber is desperate to avoid shortages, seeking to serve every customer quickly.

The friction over meeting demand is compounded by complaints about arrangements like car leases that require many drivers to work upward of 50 or 60 hours weekly to eke out a profit.

NYTIMES

A version of this article appeared in the print edition of The Straits Times on April 04, 2017, with the headline 'Uber pulls psychological levers to drive growth'. Print Edition | Subscribe